A month has gone by since the last earnings report for Affiliated Managers Group (AMG Quick QuoteAMG - Free Report) . Shares have lost about 7.1% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Affiliated Managers due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.

Affiliated Managers Q1 Earnings Lag Estimates, Revenues Down

Affiliated Managers’ first-quarter 2019 economic earnings of $3.26 per share lagged the Zacks Consensus Estimate by a penny. Also, the figure was down 16.8% year over year.

Results were adversely impacted by decline in revenues and fall in assets under management. However, lower expenses and robust liquidity position acted as tailwinds.

Economic net income was $169 million, down 21.5% from the prior-year quarter.

Revenues & Expenses Down

Total revenues fell 11.3% year over year to $543.1 million. However, the top line beat the Zacks Consensus Estimate of $535 million.

Adjusted earnings before interest, taxes, depreciation and amortization were $215.6 million, plunging 24.7% from the year-ago quarter.

Total operating expenses decreased 10.9% to $387.8 million. All cost components except for intangible amortization and impairments declined.

As of Mar 31, 2019, total AUM was $774.2 billion, down 6.8% year over year. Net outflows of $7.4 billion hurt AUM.

Capital & Liquidity Position Decent

As of Mar 31, 2019, Affiliated Managers had $305.2 million in cash and cash equivalents compared with $565.5 million as of Dec 31, 2018. Notably, the company had $1.78 billion of debt, down 2.7% from the Dec 31, 2018 level.

Shareholders’ equity as of Mar 31, 2019, was $3.14 billion, down from $3.46 billion as of Dec 31, 2018.

Share Repurchase Update

During the reported quarter, the company repurchased shares worth $91 million.

Outlook

Second-quarter 2019

Management expects adjusted EBITDA to average AUM to be nearly 10.8 bps, assuming net performance fees of 3-5 cents per share.

Interest expenses are anticipated to be $20 million. The company’s share of reported amortization and impairments are expected to be nearly $48 million. Other economic items are expected to be approximately $1 million.

Adjusted weighted average share count is estimated to be 51.1 million, mainly due to continuous share repurchases.

While GAAP tax rate is expected to be 26%, cash tax rate is forecasted at 18%.
Intangible-related deferred taxes (excluding the one-time items) are expected to be approximately $11 million.

2019

Performance fee is expected to be between $0.75 and $1.75 per share.

The company expects to repurchase nearly $100-$300 million worth of shares in the first half of 2019.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in fresh estimates.

VGM Scores

At this time, Affiliated Managers has a poor Growth Score of F, however its Momentum Score is doing a bit better with a D. However, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of this revision indicates a downward shift. Notably, Affiliated Managers has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.